Connecticut Among Top Tax-Burden States

State, local income taxes consume 12% of Nutmeggers’ income

A new report places Connecticut third among states with the highest tax burden.

Residents shelled out more than one-tenth of their income — 11.9 percent — to pay state and local taxes in 2011, according to the Tax Foundation, a policy research organization based in Washington, D.C.

That is well above the national average of 9.8 percent, according to Elizabeth Malm and Gerald Prante, authors of the report.

“Since 2000, state-local tax burdens as a share of income have grown slightly, from 9.5 percent to 9.8 percent in 2011,” Malm and Prante report. “During that period, however, there has been some slight fluctuation. From 2005 to 2010, burden as a share of income slowly increased, hitting a high of 10.2 percent in 2010 and dropping to 9.8 percent in 2011.”

The April report, titled “Annual State-Local Tax Burden Rankings FY 2011,” is based on Census information as well as other data.

The Tax Foundation releases a comparative report of state income tax payments each year. Connecticut has placed in the top three each year since 2005. New York and New Jersey, which were No. 1 and 2, respectively, for 2011 residential taxes, also have held one of the top three slots since 2005. In addition, authors of the report say the three states stand out from the rest of the nation because of their relatively high tax burdens.

“The residents of three states stand above the rest: New York, New Jersey and Connecticut,” report the authors. “These are the only states where taxpayers forego over 11.9 percent of their income in state-local taxes, one half of a percentage point above the next highest state, California.”

Authors calculated tax burden by adding state and local taxes paid by residents, then dividing those totals by each state’s total income. The emphasis was on taxes paid by residents, not taxes collected by the state. For example, New York taxes paid by a Connecticut resident working in New York would count towards the Connecticut tax payment, since it is part of the Connecticut resident’s total payments for state/local taxes.

“Nationwide, over a quarter of all state and local taxes are collected from nonresidents,” Malm and Prante note. “As a result, the residents of all states pay surprisingly high shares of their total tax burdens to out-of-state governments.

The report listed Wyoming as the state with the lowest tax burden for residents, 6.9 percent. That state’s per capita income is $50,805.

Connecticut’s per capita income is $60,287, highest in the nation, according to the report.